Large-Block Leasing Slows as Market Dynamics Shift

Picture a sprawling 200,000-square-foot warehouse, once the crown jewel of GTA’s industrial boom, now sitting quieter than ever.

The days of blockbuster leasing deals that fueled logistics giants are slowing, and the numbers tell a stark story.

As economic winds shift, tenants are rethinking their space needs, and the GTA’s industrial market is at a crossroads.

What does this mean for landlords, investors, and businesses eyeing the region’s next move?

For this week’s newsletter, let’s dive into the latest trends reshaping large-block leasing and what’s driving this pivot.

Is the Era of Mega-Warehouses Fading?

Source: Cushman & Wakefield Research.

According to Cushman & Wakefield Research, 2024 marked a 12-year low for GTA industrial leasing, with total activity dropping to 20.2 million square feet, well below the five-year average of 23.4 MSF.

The sharpest decline came in large-block leases (200,000+ square feet), which plummeted 50% from 16 deals totaling 7.1 MSF in 2023 to just 8 deals for 2.6 MSF in 2024.

While Q1 2025 showed a slight uptick with six transactions, ongoing economic uncertainty—driven by tariff concerns and global supply chain adjustments—suggests this cautious pace may persist through the year.

Smaller leases, particularly those under 20,000 square feet, are proving more resilient. Between 2020 and 2023, these deals averaged 14.1% of total leasing activity, but their share has climbed to 15.6% since early 2024.

Meanwhile, the large-block segment’s share has shrunk from 31.2% to 18.9% over the same period. This shift reflects a market adapting to new realities: businesses are prioritizing flexibility, opting for smaller footprints to mitigate risk in an unpredictable economy. For example, e-commerce firms, once aggressive in securing massive warehouses, are now scaling back as consumer spending tightens.

For landlords, this trend poses both challenges and opportunities. Properties designed for large-block tenants may face longer vacancy periods, especially in submarkets with an oversupply of big-box spaces.

However, subdividing these assets or repositioning them for mid-sized tenants (20,000–100,000 SF) could tap into steady demand. Investors, meanwhile, should focus on properties with adaptable configurations to capture the sub-100,000 SF segment, which includes startups and regional distributors seeking agile solutions.

The data also highlights a broader market recalibration. Leasing patterns in smaller size ranges (under 100,000 sf) have remained consistent, with shares holding steady across recent years (e.g., 15% for 1–20,000 sf and 21% for 20–50,000 sf in Q1 2025).

This stability suggests that while mega-deals grab headlines, the backbone of the GTA’s industrial market lies in these smaller, more predictable transactions. Tenants in these ranges—think local manufacturers or last-mile delivery hubs—are less exposed to global economic swings, making them a reliable bet for landlords.

Key Takeaway: The decline in large-block leasing signals a pivot toward smaller, more flexible spaces. Landlords and investors should adapt by targeting mid-sized tenants or reconfiguring assets to align with this demand. As the market evolves, staying nimble will be critical to unlocking value in a cautious landscape.

Conclusion:

The GTA’s industrial market is reshaping, with large-block leasing taking a backseat to smaller, more agile deals.

This shift underscores the need for adaptability—whether it’s subdividing large warehouses or targeting the resilient sub-20,000 SF segment.

As economic uncertainty lingers, stakeholders must balance caution with opportunity, focusing on properties that offer flexibility to meet evolving tenant needs.

The data suggests a market in transition, but one with potential for those who act strategically.